Asia shares tumbled on oil woes, equities outlook uncertain

SINGAPORE - Asian markets went on a full retreat on Wednesday (Feb 3), with investors scattering on concerns around the plunging oil prices.

Crude oil benchmark Brent futures continued their slide to hit below US$33 (S$47) per barrel, following the news that Iran is planning to ramp up its production.

The oversupply woes rocked the energy shares at Wall Street, and Dow Jones Industrial Average pared 1.8 per cent overnight.

This spooked the regional markets into another round of selloff, led by Tokyo's 3.15 per cent drop. In Greater China, Shanghai dropped 0.38 per cent while Hong Kong lost 2.34 per cent, even as the People's Bank of China cut the down payment requirement for mortgage loans in another move to ease monetary policies.

Singapore's benchmark Straits Times Index was also in the red, closing 28.49 points or 1.1 per cent down at 2,550.74.

Amid the bearish signs, market watchers are divided in their take on market outlook.

"We do not see a need to panic. The global fundamentals are not materially from a month ago, but the risk assets that you looked at then have since become cheaper. That is why we have changed our stance for equities from neutral to overweight this week," Bank of Singapore chief economist told the Straits Times.

The data on STI reflected as much. The overall price to book value ratio of STI is now just above parity at 1.02, while dividend yield is at 4.7 per cent, the index's highest since 2008.

DBS chief investment officer Lim Say Boon however warned off the combination of risk factors, including China's slowdown, United States manufacturing recession and further yuan devaluation.

Local investors didn't take their chance, and their exit led to 20 of the 30 STI constituent stocks closing lower.

Hongkong Land Holdings dropped the most among the blue chips, down 40 US cents or 6.48 per cent to US$5.77, and Wilmar International shed eight cents or 2.75 per cent to S$2.83.

OCBC closed down 14 cents or 1.83 per cent at S$7.49, while DBS lost 24 cents or 1.78 per cent to close at S$13.27. But United Overseas Bank managed to gain, up 11 cents or 0.63 per cent to S$17.5.

The top gaining blue chip was Golden Agri-Resources, rising one cent or 2.86 per cent to 36 cents.

Outside the STI, Frasers Centrepoint dropped seven cents or 4.15 per cent to S$1.615, ahead of its results announcement on Wednesday. In the three months to Dec 31, the real estate group saw a 47.2 per cent year-on-year drop in net profit as earnings in Singapore tapered off.

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